Scarcity of natural resources and the implications for sustainable development

The idea of sustainable development has much popular appeal, but conflicts with centuries of economic theory about how limited land and natural resources constrain the growth of economies and populations. Much of that doctrine, especially that in the Malthusian tradition, is contradicted by historical experience, but the modern threat of environmental degradation raises new questions about whether growth can be sustained. Many of those new problems result from biases in economic organization and institutions against so-called environmental resources. Marketed resource commodities like minerals and timber are protected by the incentives of owners and suppliers to conserve them, enhance them and find new sources, and by the incentives of users to economize on their demands and find cheaper substitutes. Together, these forces have been sufficient to offset depletion and render resources less scarce over time. The same forces are not at work on environmental resources like water and air, so they are over-used and degraded as demands grow. However, promising opportunities exist to develop property rights and economic incentives to encourage users of environmental resources to protect and husband them, and these are likely to be more effective in harmonizing economic activity with the environment than purely regulatory policies.